What You Should Know:
- An insurance binder acts as a temporary verification for a newly leased or purchased vehicle
- Depending on the policy, a binder will only last between 30 and 90 days
- Insurance binders don't guarantee long-term coverage and must be updated with the certificate of insurance once you receive it
If you’re excited to hit the road with a brand new pair of wheels, you might be wondering what you need to do first. What if you get pulled over? Don’t you need proof of insurance and vehicle registration?
The short answer is yes. But before your formal car insurance policy is issued, your car insurance company might supply you with an insurance binder. Binders were once common, but less so now. Although the steps for how to buy car insurance are different today, binders may still be used.
An insurance binder acts as temporary insurance verification for a newly leased or purchased vehicle. Insurance binders list your coverage limits along with deductibles, coverage dates, and covered drivers.
In this short guide, we’ll explain everything you need to know about insurance binders. Do you need an insurance policy now? Enter your ZIP code above for free quotes from top companies.
What's the difference between an insurance binder and an insurance policy?
An insurance binder serves many of the same purposes as an insurance policy, such as allowing law enforcement, lenders, or the DMV to verify that you're legally insured to drive. Both are proof of insurance.
In addition, both insurance binders and insurance policies are legal documents that adhere to state laws. Because of this, you won't have a binder or policy that's a handwritten note or email. Both documents are official.
But the two documents are not identical.
An insurance binder summarizes the details of your insurance policy, such as the coverage, deductible amount, and listed drivers. It serves as proof of insurance, but only for a given period.
A car insurance policy is an official contract between a driver and insurer and includes all the terms and conditions of your insurance. This is a finalized, formal contract.
Note that a binder is not a guarantee that a policy will be issued. Instead, binders act more like verification of a pending policy, so while the insurer must cover you until the binder's expiration, it's not official until you have a formal policy.
A binder will only last between 30 and 90 days, depending on the policy. Once it expires, you're no longer covered and must follow up with the insurance provider to ensure you have an active insurance policy.
In most cases, an insurer will notify you in advance if the policy won't be issued. Still, it’s important to track the binder's expiration date and follow up with the insurance agent about the status of your pending policy.
Is an insurance binder the same as a certificate of insurance?
No, an insurance binder is not the same as a certificate of insurance.
The certificate of insurance verifies a formal policy, while an insurance binder verifies a pending insurance policy. Insurance binders don't guarantee long-term coverage and must be updated with the certificate of insurance once you receive it.
How to Get Proof of Insurance
Fortunately, getting proof of insurance is a quick and easy process.
Find a reputable insurance company that offers digital insurance ID cards. Most states allow digital insurance cards as valid proof of insurance.
Fill out your personal and vehicle details, then request an online quote. Then, if everything looks good, purchase your insurance policy.
Wait for your insurance ID card to arrive via email. This usually only takes a few minutes.
Most major insurance companies operate digitally these days, which means insurance binders have become unusual. Still, some small companies or agents may use one.
What's listed in an insurance binder?
So your insurer of choice doesn’t provide quick digital proof of insurance, and you have a binder instead. What can you expect to find in your newly issued insurance binder?
Insurance binders identify the driver(s) insured and the coverage. Typically, this includes:
- Names and contact information. The binder should have the insured driver’s name and contact information, the name of the insurance company, and the insurance agent's name and contact information.
- Effective date and expiration date for the binder. Different insurers offer different binder terms, so be sure to keep track of your effective and expiration dates. Some binders will include specifics like the time of day the binder went into effect and when it will expire.
- Description of the insured vehicle. This typically includes the car's make, model, and vehicle identification number (VIN).
- Binder number. This is a series of numbers and letters identifying the binder. Note that this is not the same as the insurance policy number—your binder will only list a policy number if the binder has been issued to extend the term of a policy that has expired, but this isn't common.
- Coverages and coverage limits. The binder should cite the deductible for each type of coverage. The types of coverage and limits should also be included, and any endorsements that are part of the policy coverage.
- The insurance company. The binder should clearly state the insurance company’s name and the type of coverage purchased.
- Terms. The binder will identify the term length of the insurance policy.
- Lender details. If the vehicle is financed, the binder may list the lender’s name.
Insurance binders are usually an Acord 75, widely used by insurers nationwide. This insurance document contains all the essential information in state-specific language, providing evidence of liability car insurance, collision coverage, garage liability, and more.
What isn't included in an insurance binder?
An insurance binder summarizes the key coverage and details of your insurance policy to serve as verification until the formal policy arrives. In most cases, a binder won't define the fine print details of the coverage.
Do you need a car insurance binder?
In the past, drivers had to meet with an insurance agent at an office to obtain insurance. Policies took weeks to process, so the agent would offer an insurance binder as proof of a pending formal policy to allow you to drive legally.
Today insurance policies are often processed in minutes, making insurance binders less necessary and less common. Many insurance companies can verify drivers' information quickly through online databases, and insurance ID cards may be sent via email to be downloaded and printed. Some insurers even give you proof of insurance via their app.
However, if your insurance company is old-school, your binder might come in handy. An insurance binder protects you if you've been in an accident and need to file a claim before your formal insurance policy arrives.
Here are some situations when you may need a car insurance binder:
- Purchasing a New Insurance Policy. Unless you receive your new insurance policy within minutes, you should request an insurance binder to maintain proof of insurance in the interim. Having an insurance binder can provide proof of the coverages you hold and confirm that you're insured.
- Financing a Car. If you're purchasing a car with the help of a loan, you will likely need an insurance binder as proof of a formal policy. Most lenders require evidence of insurance as part of the financing agreement. If you don't have your formal policy yet, the binder will act as evidence of insurance to the lender.
Insurance Binders and Proof of Insurance: The Bottom Line
Today, people have more insurance options than ever—which means you may never need an insurance binder. While these documents once served as temporary proof of insurance, most contemporary insurers can now issue digital proof of a finalized policy within minutes.
Want to get proof of insurance fast?
Type in your ZIP code above to compare affordable auto insurance rates in your area. Most auto insurers provide instantaneous policies with digital ID cards sent to your email, so you won’t need an insurance binder.
Frequently Asked Questions About Car Insurance Binders
By now, we’ve answered the basics to your burning question, “what is an insurance binder for a car?” All that’s left is understanding the fine print.
To that end, we’ll answer some common questions.
#1 – How long is a binder good for?
The insurance binder should be valid for a set term written in the insurance document, typically 30 to 90 days. Once the official insurance policy arrives, the binder is null and void.
Check your specific binder to understand your term length.
#2 – What happens if a binder expires?
If your insurance binder is close to its expiration date and your official insurance policy documents haven't arrived, you should follow up with the insurance agent about the status of your policy.
You may not be insured after the date on the binder if there's a complication with your official policy. In addition, if there's a delay, it's important to follow up to ensure you have your official documents before your binder expires. Without them, you could end up driving illegally.
#3 – What's the difference between a binder and a quote?
An insurance quote estimates a premium for the insurance coverage you selected, based on the information you entered about your driving history and vehicle.
However, a quote is not an offer of insurance or an insurance contract.
If you like the quote, the insurance provider might come up with an insurance binder, which says that you will be covered once you purchase the insurance. However, in many cases, you’ll receive your digital proof of insurance within minutes.
#4 – When will a binder be issued?
If you don't receive official documents quickly, an insurance binder will be issued as soon as you put in a request to purchase an insurance plan. This acts as temporary insurance verification that you are covered.
A binder is also useful when the insurance plan documents, such as the contract wording and declaration page, aren't available immediately. Sometimes, insurance companies take a few days to process paperwork, and the binder proves you are insured in the interim.